Eighteen Hospital Executives In The State Earn More Than $1 Million

The health care system may be ailing, but newly compiled data show that compensation for top executives at Connecticut hospitals remains healthy.

Eighteen executives at the state's 30 hospitals made more than $1 million in 2009-10, according to information the hospitals reported to the Internal Revenue Service. More than a third of these 18 – seven – were stepping down from their posts, and retirement benefits helped drive compensation across the board.

Hartford Hospital's outgoing chief executive officer, John J. Meehan, was the highest paid in Connecticut and one of the highest paid nationally. His compensation totaled $6.98 million – all but $1.1 million of it nontaxable and retirement benefits, according to the hospital.

The median compensation for the highest-paid position at each hospital in Connecticut was $678,000, according to a C-HIT analysis. Half had compensation above that figure and half were below.

When the group is expanded to include the top five executives at each hospital, the Connecticut median falls to $320,000, according to data provided on selected hospitals by GuideStar, a source of information on nonprofit organizations. Nationally, the median was $260,000, GuideStar's data on 10,674 top executives at selected hospitals shows.

Among the highest paid executives nationally was outgoing president and CEO of the Hackensack University Medical Center in New Jersey, according to GuideStar. He made $7.3 million. The data show that only a handful of executives across the country made more than $5 million.

In addition to Meehan, Connecticut's 10 highest paid administrators were two Yale-New Haven Health System executives, the departing CEOs at the Hospital of Central Connecticut and the Hospital of St. Raphael, the departing treasurer of Hartford Hospital, the treasurer of the Hospital of Central Connecticut and the presidents of Stamford, Yale-New Haven andSt. Francis Hospital and Medical Center. All made more than $1.59 million in "reportable" W-2 and 1099 miscellaneous compensation.

A few executives had significant "non-reportable" compensation in addition to W-2 and 1099 pay. The outgoing president at William Backus Hospital in Norwich had $2.2 million in deferred compensation related to his retirement, for total pay of nearly $3 million, according to a C-HIT analysis of the data. The chief operating officer at the Hospital of Central Connecticut had $472,443 in reportable pay and $838,880 in other compensation, for a total of $1.3 million.

Executive pay has provoked fiery debate for years. The controversy is expected to intensify because of the unprecedented financial pressures facing the health care industry and the rising costs of medical care.

"I don't understand what the hospitals are getting for their money. Some of the highest paid are the worst performing," said Ellen Andrews, executive director of the Connecticut Health Policy Project in New Haven. "The system isn't working for anyone – for the state, for the hospitals or for consumers."

Others say the compensation reflects the complexity of the health care business, keen national competition for good leaders, and the uncertain future that executives face when they sign on for top-level positions in an industry undergoing enormous change. Pay needs to be competitive to attract and retain key executives, they say – even for nonprofits that are struggling to find their place.

"Hospital executives are responsible for extremely complex organizations," said Michele Sharp of the Connecticut Hospital Association. In addition to managing advanced medical services and technology, a skilled staff and extensive physical plants, hospital CEOs are often responsible for an array of services beyond the hospital, such as primary care clinics, home health organizations and surgery centers. They work in a highly regulated environment and must comply with demanding standards in areas that range from patient safety and financial performance to institutional stability and community health, Sharp said.

"When you bring in exceptional talent, you can manage effectively and efficiently," said Vin Petrini, senior vice president for public affairs atYale-New Haven Hospital. "It's a very complicated and complex industry. We need to be thoughtful about how we manage and retain and recruit talent."

"What we've really focused on is a more efficient way to manage," he said, adding as an example that Yale-New Haven, with more than 15,000 employees, has created some high-level posts by combining key positions across the hospital and the health system.

He and others emphasized that for most executives, compensation is not take-home pay.

Petrini said compensation for the two highest-earning Yale-New Haven executives included funds that accumulated over their careers, but that had to be reported to the IRS when they vested. The two weren't actually paid those amounts during the year. "In a sense, it gives a false impression," Petrini said.